Inputs in distress: Geoeconomic fragmentation and firms' sourcing

Ludovic Panon, Laura Lebastard (), Michele Mancini, Alessandro Borin (), Peonare Caka (), Gianmarco Cariola (), Dennis Essers, Elena Gentili (), Andrea Linarello, Tullia Padellini (), Francisco Requena Silvente and Jacopo Timini
Additional contact information
Laura Lebastard: Euro Area External Sector Division, Directorate General Economics, European Central Bank
Alessandro Borin: Directorate General Economics, Statistics and Research, Bank of Italy
Peonare Caka: Analysis and Research Department, Bank of Slovenia
Gianmarco Cariola: Regional Economic Research Unit, Bologna Branch, Bank of Italy
Elena Gentili: Regional Economic Research Unit, Bologna Branch, Bank of Italy
Tullia Padellini: Directorate General Economics, Statistics and Research, Bank of Italy

No 452, Working Paper Research from National Bank of Belgium

Abstract: We study how disruptions to the supply of foreign critical inputs (FCIs) − that is, inputs primarily sourced from extra-EU countries with highly concentrated supply, advanced technology products, or which are key to the green transition − might affect value added at different levels of aggregation. Using firm-level customs and balance sheet data for Belgium, France, Italy, Slovenia and Spain, our framework allows us to assess how much geoeconomic fragmentation might affect European economies differently. Our baseline calibration suggests that a 50 % reduction in imports of FCIs from China and other countries with similar geopolitical orientations would result in sizable losses of value added with significant heterogeneity across firms, sectors, regions and countries, driven by the heterogeneous exposure of firms. Our findings show that the short-term costs of supply disruptions of FCIs can be substantial, especially if firms cannot easily switch away from these inputs

Keywords: Geoeconomic fragmentation; global value chains; global sourcing; international trade; imported inputs. (search for similar items in EconPapers)
JEL-codes: F10 F14 F50 F60 (search for similar items in EconPapers)
Pages: 62 pages
Date: 2024-08
New Economics Papers: this item is included in nep-eec, nep-eur and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Inputs in Distress: Geoeconomic Fragmentation and Firms’ Sourcing (2024)
Working Paper: Inputs in distress: geoeconomic fragmentation and firms' sourcing (2024)
Working Paper: Inputs in distress: geoeconomic fragmentation and firms’ sourcing (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:nbb:reswpp:202408-452

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